Hedge Fund Tycoon Convicted In Insider Trading Case

Former Goldman Sachs board member Rajat Gupta was found guilty today of conspiracy and securities fraud. Prosecutors had accused Gupta of passing on inside information about the firm to hedge fund tycoon Raj Rajaratnam. NPR's Jim Zarroli reports.

JIM ZARROLI, BYLINE: The verdict came on only the second day of deliberations. Gupta was acquitted of two charges but convicted of four others. The 63-year-old Indian-born Gupta is the most prominent business leader convicted so far in the government's ongoing insider trading investigation.

In addition to being on the board at Goldman, Gupta is the former head of the consulting firm McKinsey & Company. U.S. officials said he had long-standing personal and business ties with Rajaratnam, head of the Galleon Group hedge fund company.

Former criminal court judge Margaret Finnerty(ph) says the government was able to present evidence that Gupta would call Rajaratnam with information about Goldman right after learning it.

MARGARET FINNERTY: And then you saw trading activity by Galleon occurring within minutes after that. So I think there was such a pattern developed through the evidence that the jury realized this was not just a coincidence.

ZARROLI: The defense argued that the case against Gupta was circumstantial and that there was no proof Gupta ever benefitted from the illegal trades. But prosecutors painted a portrait of a man eager to move in the world of high-end money management and anxious to curry favor with the billionaire Rajaratnam.

The two men had also started a private equity fund together, and in the end, two jurors said the case against Gupta was just overwhelming. Prosecutors played tapes of wiretapped conversations in which Rajaratnam boasted about getting tips from a Goldman board member.

Gupta's lawyer, Gary Naftalis, said he would appeal the verdict. This is just round one, he said.

GARY NAFTALIS: We continue to believe Mr. Gupta's innocence of these charges, and we continue to fight for innocence, think he's an honorable man.

ZARROLI: For now, Gupta is scheduled to be sentenced in October. He's expected to get some jail time, although not as much as Rajaratnam, who is serving an 11-year term in federal prison. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright National Public Radio.